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Closing Bell

News/Business. Maria Bartiromo, Bill Griffeth. A guide through the most important hour of the Wall Street trading day. New. (CC) (Stereo)

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01:00:00

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San Francisco, CA, USA

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Virtual Ch. 58 (CNBC)

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mpeg2video

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ac3

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704

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480

TOPIC FREQUENCY

Us 19, U.s. 15, Pepsi 11, Europe 7, S&p 7, United States 3, Texas 3, Rick Santelli 2, Pepsico 2, Ford 2, Berkshire Hathaway 2, Phil Lebeau 2, America 2, Siemens 2, Uk 2, Lindsey 2, Germany 2, New York 2, Charles Schwab 1, Cashout 1,
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  CNBC    Closing Bell    News/Business. Maria Bartiromo, Bill Griffeth. A guide  
   through the most important hour of the Wall Street trading day....  

    February 14, 2013
    3:00 - 4:00pm EST  

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all stations come over to mithis is for real this time. step seven point two one two. verify and lock. command is locked. five seconds. three, two, one. standing by for capture. the most innovative software on the planet... dragon is captured. is connecting today's leading companies to places beyond it. siemens. answers. . in sell briggs of valentine's day, we are highlighting some of the most romantic hotels around the world, according to travel website trip adviser. the winners were based on feedback from couples. at number three is the crownly
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boutiq boutique and number two is in italy. >> and the most romantic hotel in the world, the anastasi apartments in greece. >> in a that looks u.s. >> and in the u.s., the bardesbond in, the rooms start at 600 and go up to $1,200. >> they bottle that, it's called wine. thanks so much. happy valentine's day, everybody. no matter what you do, enjoy it. thanks for watching "street signs." hi, everybody. we enter the final stretch. welcome to the "closing bell." i'm maria bartiromo at new york stock exchange. this market fighting for a close in positive territory, brill.
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>> the dow is fighting. got the s&p and nasdaq positive, but we're kicking off the final hour watching other stories as well right now, including a huge day for mergers. warren buffett buys heinz. american/usairways form the biggest airline in the world, but so far the stock market seems unimpressed. what message is that saying about where our economy is right now? we'll look at that coming up. >> a lot of implications to see this deal flow pick up steam early in the year. more signs though that the individual investor is dipping his or her toes back into the stock market. the balance in 401(k)s rising by double digits last year. get those numbers and we'll take a look to see if more people are contributing as the dow flirts with a new record high. >> and the ill-fated carnival cruise ship. now we are told a few hours from being towed into port. could be a lot of hours. new pictures are coming in right now, and that stock has been under pressure since news broke of the power failure on sunday.
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in just a few minutes we could be speaking live with a passenger on that ship for the latest on the conditions, and we'll find out whether they jive with what carnival has been saying about what passengers are going through right now. >> all that coming up in the program. first, let take a look at where we stand as we approach the final stretch for the market on the day. the dow jones industrial average down just a fraction. steady for the last hour or so much. nasdaq positive, up two points on the session. take a look, 3198 and s&p 500 in positive territory with a gain of 1.75 points. >> the dow son pace to finish lower for the second consecutive week but in today's "closing bell" we've got our exchange josh brown, cnbc contributor from fusion analytics, jim pullson from wells capital management and juan kenneth pulcari and our own rick santelli. for you, jim carlson, it's all
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forward. >> there's still a lot to like. corporate earnings coming in right and a relatively low competitive hurdle with rates and a liquid market, investors challenging from their asset allocation, probably underallocated stocks, growth coming in better than expected. we've got confidence rising as evidenced by better m & a activity, for example. >> all right. >> so i think you'll want to stay overweighted stocks even if you have to withstand some pullback. >> what about the m & a action? josh, what does it tell that you we're seeing more deal flow? is that a positive for the stock market, or is it a result of the market as companies use their stocks as currency? >> no, that's -- i think that's a positive provided the deals don't get embarrassing and out of control, and they don't become this lbo mania where it's just debt piled on top of debt and you're seeing people do deals just for the sake of the
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transaction itself. i would not characterize the action as that. what i would say is the huge thing that's happened for the stock market is not the retail investor or whether or not he was in. there's no correlation between fun flows and stock market performance in the last five years. what has happened is $4.5 trillion of corporate buybacks. that's what driven the stock market. so the real question is are they going to find something more interesting to do than buy their own stocks? are they going to start acquiring competitors? that could be a tailwind that not a lot of people were counting on this year, and i don't see how we could call that negative, again, until the deals get really silly. >> you mentioned lbor, leveraged buyout. >> don't want to see a ton of that. >> yeah, exactly. a lot of buzz on the floor right now. what's the mood here, what would you say? >> from the m & a side the news is very exciting. the deal we saw with heinz is
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another indication there's a lot of money on balance sheets and companies are looking to put that money to work and looking for the right opportunities so like all the other guests i do expect the m & a activity absolutely is going to pick up this year as companies are looking to use that cash and better their businesses. that being said, you can see on the s&p we're still trading in that very tight range, banging our head on 1525 on the s&p which is a level of resistance. we've seen it the last four or five days, and i think we'll see it again. i don't think there's any reason for the market to push up and through. it needs to consolidate before it makes the next move. >> we'll see that. rick santelli, what's the focus from your end today? >> a couple of things. traders down here have a pretty good memory and remember a lot of lbos, mergers and acquisitions, big deals in '06, and that was actually not a good signal at the time. add in a lot of liquidity, as josh said, the last five years are different. of course, they are different, all floating in a lot of water and i'm not talking like a cruise ship, and when it comes
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to interest rates, pretty much everybody has written off the fact that they can go down. it's all about them going up. somebody better remind the $85 billion contributor to going the other way, and that's the federal reserve. today you have all interest rates actually moving a bit lower, as you see, 10s and 30s intraday, and also even with the yen up against the dollar, the euro centric dollar index is having a pretty good day and if you look at the daxx, the kaks and the nikkei and take care of the currency issues, they are getting much closer to the zero line in terms of their equity net change for 2013. >> speaking of that, reports out this morning that george soros had made $1 billion on his bet against the yen. he's done it again, rick. >> yeah. i think he's been watching cnbc, buddy. we've been talking about that trade since thanksgiving. >> hey, guys. one thing that's important to bring out. >> when we were on the air in davos, bill, he said that he
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believed in the japanese authorities to do what they are doing and basically predicted that the yen would keep going lower. >> once again, if you had watched cnbc. >> so he said it. >> what were you saying, sorry, kenny? >> i wanted to throw one other aspect out. you know, i don't think that it's in anyone's best interest to try to pick a top here, because it's really hard to do. you can look at price right now and say everything is acting as it should. the bakes are consistently making one and two-year highs, et cetera, but there will be a pullback. i think people need to steel their nerves. >> you're not putting any long positions on right now, are you? >> we're pretty long right now, so this is kind of a hot stove market. all i can say is my get tuls me -- let's not try to figure out today is the top. yesterday, tomorrow.
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i think it's too hard. >> right, but i will say if we do push up and through 1525 decisively, you're going to see a very quick move to 1575 because that's really the next pot of resistance so don't be surprise federal in fact that happens. >> four points away from that there. >> thanks, guys. appreciate it. >> we'll see you soon. >> us a just heard, a flurry of merger activity sparking a lot of big moves on wall street today. let's check in with bob pisani in the middle of all the action. hello, bob. >> hello, maria. the merger deals are affecting the stock market. the historic heinz deal is really moving some of the big package food companies. take a look. historic highs on a number of them. general mills, historic highs. schmucker which picks jif, pillsbury, folger's coffee, that's historic high. b & g foods, another big distributor, campbell soup, not historic but a four-year high. let's move on and talk about airlines. look how bad they all are. the era of consolidation is over. so we'll have three big
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airlines, delta, continental and united. it's unlikely we'll see big increases in prices which is what will drive these stocks further. remember, airline stocks, many of them, sitting right near five-year highs. i've been asked about the solar stocks, and they are all up again today. these are very funny stocks. they move on momentum. there's been no news today. there's been talk about finally a stabilization in prices for solar panels recently. who knows, those things go up and down a lot. i would note, take a look at the etf. etf for solar stocks, guggenheim puts it out. they really all bottomed riding around the election and there's speculation after that there, of course, there might be tax cuts before the election or tax breaks might be removed. obviously that's not going to happen, and maybe that's been a little bit of an effect as well on the solar stocks. guys, back to you. >> welcome back, by the way. i know you loved leaving florida to come back to the northeast. heading towards the close here,
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we've got about 50 minutes left in the trading session. the dow is the strugler, down seven points. right now the s&p is up a point and nasdaq up a fraction at this hour. >> it's been anything but party time for carnival cruise lines. its disabled ship, "the triumph" is limping towards mobile at this very moment. up next we'll take you on board exclusively as we speak to a passenger who is on the ship at the movement that's next. >> also. coke has been dragging down the dow all week. is it time to take the pepsi challenge and bet on coke's arch rival? that trade coming up in a moment here. and then later, famed federal reserve critic jim grant is with me saying there's a toxic alignment of forces in the bond market that could send interest rates skyrocketing. scary prediction coming up when jim grant joins us exclusively.
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welcome back. things are going bad to worse for carnival's disabled cruise ship. one of the tug lines is now broken. we've got all the angles covered. first nbc's jay gray is in mobile, alabama with the very latest details. ed buck is on the telephone with us. he's a passenger on the ship right now. let's start with you, jay. what can you tell us? >> reporter: yeah. maria, what else can go wrong?
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you know, now the tug line has snapped or become disengaged. that lex tend the wait even longer, not only for those onboard and you're getting ready to talk to someone there, but 100 or so family members who have gathered at the terminal to try to greet their loved ones. now their wait extended. a lot of concern and frustration going as you might imagine. they will greet the loved ones. the others will board chartered buses going back to galveston, texas where the voyage originated and was supposed to end on monday or new orleans, louisiana, where 1,500 hotel rooms are reserved for them to kind of dedepress for the day, get a warm shower and fresh bed linens and on chartered planes they will be taken back to texas or their homes, so eventually, and now sometime likely after midnight central time here in mobile, they will finally make it to this port and begin to finally get back on land after what's been a horrific ordeal. >> really, what a shame. jay, thank you. joined on the phone by a
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telephone aboard the triumph from houston, texas and works in the health care industry. ed, thanks so much for joining us. we know a tow line has broken. have you gotten any guidance on how long the delay will be? what can you tell us, ed. >> the delay is not necessarily because the tug's line broke. there's five or tugs laying sitting around, but were stopped because the tide is out, and the ship is too heavy, and we would go aground, so we're waiting for the tide to come in. they original any estimated us coming in at 4:00. they said it was going to be a six-hour delay and that was two hours ago so about four more hours, and then what's going to be the challenge is disembarking because the elevators do not work due to lack of power, and everyone is going to be carrying their own bags down, and, for instance, we're on floor 11, so that's going to be a challenge, but otherwise morale is pretty good on the boat overall.
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>> ed. >> yes, sir. >> heard all the horror stories about the conditions and about the food and about things we can't really talk about at dinner time on television. we don't know whether that's extreme or if it's typical. give us your version of what's going on, and, you know, carnival says that their employees are doing all that they can to make you passengers comfortable. are they? what's going on? >> yes. kudos to carnival. they have done everything possible to make our lives nice. they have -- they have offered us all of our money back. they have offered us an extended -- an additional cruise voucher, and then the other day they came on and said they are going to issue everyone $500. they have gone over and above to make sure everybody is comfortable. >> are you getting any sleep? how's the food? i mean, what's going on? >> we get a lot of sleep because there's nothing else to do, but that's -- that's all good.
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the camaraderie has been very good. >> what about the sewage problem? we've heard reports of sewage problems, limited number of toilets throughout the ship. how bad has it been? >> okay. now, that is the problem with the boat, is that the toilets have not worked, and they ended up having to issue us these bio we call them the red bags, and that is what's been used almost exclusively for almost the first two days after the fire, and all of a sudden they got some of the public bathrooms working and people that stand there. as soon as you go to the bathroom, they are there cleaning that thing instantly and you're ready for the next person. >> showing you a photo of you, ed, holding a redba ing ing a r >> that's one of the red bags. >> these are your pictures. >> are you angry about this? i mean, what's your mood going through this? it sounds like just a week of hell for you passengers, is it?
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>> that is not case. no, that is not the case. it has -- a lot of people have been suffering because their rooms on the very lower decks sort of flooded or had smell because there's no air circulation and they were up, and the first day or so it was nice and all of a sudden it rained and got cold so that was not so good, but my personal situation is we are lick and we have it fairly good meaning that we actually are in a balcony room, and so we have air and we have light, but most places do not have air or light. if you didn't bring a flashlight, then you couldn't see other than the tiny emergency lights in the hallways. the food has been pretty good. they have kept that coming. we had -- at one point we had three other carnival cruise lines circling us, bringing over food in the big life boats. we've -- the lines to eat now
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have been anywhere between 30, 45 minutes, except for one day when they got real cooking, they cooked cheeseburgers and that was a three-hour line but the camaraderie has been good, kind of like the hurricanes. everybody huddles together and then they have -- one other thing. they have had, and this is the cell phone problem for everybody. they only seem to have power around the elevators so they are having these large charging parties where they have 15 extension cords all plugged together, big strips, and everybody is sitting around for half an hour, 45 minutes charging, and then you pull out, and it's all very organized. there's no challenges. carnival actually one night opened the bars and free beer and wine for everybody. that was nice, but -- >> i can certainly imagine that. >> overall -- overall it's not been horrible, but it's been an inconvenience for sure. >> certainly a memorable trip, i
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imagine. >> absolutely. >> will you go on another cruise? would you be willing to take another cruise, or are you done for cruises for a while? >> this is my 13th cruise, and yes i would go on a cruise. this has been very well handled. they do a good job. >> you sound like a nice guy that's willing to look on bright side anyway. appreciate your view of what you've been going through on the carnival "triumph." thanks so much. good luck. >> our lives -- we were worried, don't get me wrong. >> i bet. >> but we're doing, we're trying to look at the brighter side of life. >> thank you so much. >> best of luck. >> get off safely, my friend. >> let's bring in a family member waiting at the pier to pick up her in-laws on the ship. >> i am. how are you? >> good to have you. thanks for joining us. >> what are you seeing from your standpoint? >> well, right now it's just a waiting game. we had just received word right
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before y'all report it had that the tug line had broken so right now it's just a waiting game. >> who do you have on the ship, and what have you heard from them? >> i have my mother-in-law and my sister-in-law, and their friends, angie and margaret whose husband buck is waiting here patiently for her to return as well. >> have you heard from them at all? >> we heard from them briefly this morning. they were tired. they were hungry, and they were ready for a shower, and they were definitely ready to get off the boat. >> i bet. >> can you tell at all? i mean, i don't know if you just heard our interview with that other passenger on the ship board, he's giving us a little more moderate tone from the horror stories we've been hearing. have your passengers, your
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friends and your mother, have they gone through a very difficult time, or is it media hype that we've been getting in many cases this week? >> well, i don't -- there may have been some media hype, but from some of the things that i'm hearing, some of them coming directly from our family, conditions were not -- not good at all on there. just from what we've been gathering. >> sounds like it depends on which part of the ship you're on, if you have the better accommodations you're having a better time there. >> bridget, we wish you well and hope your mother and fellow passengers can get off the ship there safely. >> thank you very much. >> thank to you, too. >> coming up, we'll hear from some top lawyers, yes, lawyers are getting involved, if other passengers will have a case in this one because you can be sure there will be a flurry of lawsuits stemming from this event. michelle caruso-cabrera is on
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her way to the gulf coast as we speak. she will have reaction from passengers all day tomorrow right here on cnbc. >> meanwhile, we're in the final stretch of trading, 35 minutes before the closing bell sounds. a market that's trying to come back here. nasdaq and s&p positive. dow jones industrial average looks like it's about to go positive. down just about a point and a half. >> we will see. meantime, pepsi reporting strong earnings today, but arch rival coke has been losing some fizz lately. when we come back we'll tell you which stock may be the better bet to win the soda wars. >> speaking of sodas, first new york mayor michael bloomberg banned super-sized sugary drink and now he wants to do the same with styrofoam cups, the cups you drink soda out of. that and a lot more next. you ready? we wanna be our brother's keeper. what's number two we wanna do? bring it up to 90 decatherms. how bout ya, joe? let's go ahead and bring it online. attention on site, attention on site.
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where will it end, and is it coming to your city? supersized sodas are outlaws in new york thanks to mayor mike bloomberg, and now he's got another ban in his sight. courtney reagan has the details. >> environmentalists are rejoicing but restauranteurs may not be. in his 12th and final state of the city address new york city mayor michael bloomberg is proposing a citywide ban of plastic foam containers. >> styrofoam increases the cost of recycling by as much as $20 per ton because it has to be removed. something we know that's environmentally destructive, costing taxpayers money and that is easily replaceable. we'll work to adopt a law banning styrofoam food packaging
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from our stores and restaurants, and don't worry. the doggie bag and the coffee cup will survive just fine. >> a switch to an alternate material would be more expensive and dunkin' donuts would have to replace foam cups. city council speaker christine quinn does seem open to it. in bloomberg world, new yorklers dress less than 16-ounce sodas in paper cups, maria. back to you. >> court, thanks very much. pepsico higher after the beverage giant proposed earnings that exceeded expected. time to buy or are you better off with rival coke? coke versus pepsi in talking numbers today on the technical side. richard ross is global technical strategist with you aburg grayson and on the fundamental zachary karabell is a cnbc contributor. good to see you guys. thanks for joining us. >> and you. >> rich, talk charts. walk us through. which chart looks better?
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>> let's start with a performance comparison of the two stocks. clearly you're going to see some technical symmetry, some really strong correlation between the two. however, we go back and start to see pepsi asserting its dominance over its rival coca-cola. it's one of the key underpinnings of our bullish call for pepsi. now, when we take you through the stock's specific chart of coca-cola, you see this week's earnings. a big disappointment. now the stock had been acting well coming into those earnings. you saw that key breakout right ahead of the earnings. boom, you get a negative number on the tape, and now we get a false breakdown -- a false breakout, false breakout is going to lead to a fast move in the opposite direction which is exactly what we've seen setting the stage for further weakness down to 36. potentially a break down down to the $34 level. when you bring up the chart of pepsi you see exactly the mirror image, a strong fundamental data point and you get the same breakout, but on the pullback you hold the breakout and see the beautiful moving averages.
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they didn't cross to the downside like in coca-cola. we're above the 50 and 200. we think you could push out to a fresh five-year high to $75 in pepsi. that's where you want to put your money. >> okay. you agree on fundamentals, pepsico? >> not entirely. first of all, i feel like an old "saturday night live" skit with john belushi, no, coke, coke, pepsi. i would say both of these companies are executing extremely well globally. they are both led by unusually dynamic and global ceos and for pepsi, coke. they have a diverse range and they have moved away from the pure sugar water syndrome that has bedeviled them in the past, into juices, into sports drinks, and i don't see a lot of daylight between them. i mean, there's close to a global duopoly within this suite of brands executing at a relatively high level, and while they have both had their stumbles, pepsi is trying to shift away from the core sugar
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drink and coke may have found out -- >> you hit the nail right on the head, and i think it's that strength, that sugar that is keeping people away. both stocks underperforming in the broader mash. now we're in a bull market and can see that with prices in the broader averages pushing out to fresh multi-year highs. a stock like coca-cola breaking down. that's not where you want to have your money going forward. in a strong tape you want to be in the strong stocks that are leading the charge. not on the weekend. >> the momentum in coke and pepsi's favor. once the dust settles from this particular week of earnings, i think you're in relatively strong businesses, both of them, neither of which i find overly exciting compared to other opportunities in the market and none of which will hurt you. >> i agree. >> i think these are sleepy stocks, conservative. this is strong tape, as i said. you want to be in strong stocks. >> as for michael bloomberg, don't buy them in new york city. >> thanks, guys. >> see you soon. appreciate that. thanks so much. bill? >> all right. i don't know what it is about
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the dow. doesn't want to go positive. just did. >> there you go. >> i was just thinking it wanted to stay red for valentine's day. it's up a point. the s&p and nasdaq also fractional gainers. >> i'm loving this deal. but why the disconnect? >> and carnival cruise lines, a lot of people tweeting how he can get cell service out in the middle of the ocean when he can't get it in a major metropolitan area. that's a good question. stay tuned. tdd# 1-800-345-2550 you should've seen me today. tdd# 1-800-345-2550 when the spx crossed above its 50-day moving average, tdd# 1-800-345-2550 i saw the trend. tdd# 1-800-345-2550 it looked really strong. tdd# 1-800-345-2550 and i jumped right on it. tdd# 1-800-345-2550 tdd# 1-800-345-2550 since i've switched to charles schwab... tdd# 1-800-345-2550 ...i've been finding opportunities like this tdd# 1-800-345-2550 a lot more easily. tdd# 1-800-345-2550 like today, tdd# 1-800-345-2550 i was using their streetsmart edge trading platform tdd# 1-800-345-2550 and i saw a double bottom form.
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how did the "triumph" passenger ed buck get such great cell service off the ship? an answer from our news desk. one of our news desk hans has been on about a thousand cruises and he writes. there's a t-mobile app. takes your phone and connects it to a satellite on the ship and beams it up. there you are. we need those in major cities around the country here. what a day for mac sigsz on wall street. maria loves this kind of stuff. >> i do. brian schactman has the details of berkshire hathaway's big
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purchase and phil lebeau is covering the purchase of usairlines and american. >> reporter: a quick recap here for you. berkshire hathaway and brazilian investment firm 3g buying heinz in a $28 billion deal when you roll in the debt. 3g will own half the company and run t.buffet gets the other half. he put in a little more equity, but will draw a dividend. classic buffet move, right? owns a great brand and gets income from it as well. when you look at the brands, you wonder why buffet didn't already run it, oreida and cherry coke, goes really well. nelson peltz sold off a lot of heinz last year and will get profit off this deal as well. the question many are asking whether this will spark more deals in the food space. you never know, but a lot of insiders told me today because
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of buffet and the brazilians this may seem special. talking about special ones. how about the deal that created the largest airline in the world. phil lebeau, of course, it's all over that one. hey, phil. >> hey, brian. you know, we've been talking about this $11 billion merger, take a look at what the investor of airline stocks want to do. they are selling and selling big. take a look at the airline index. showing you a three-month chart so you can see the run-up. this is the biggest decline in the index that we've seen in the last three months and here's the reason y.just a few years ago there were seven major airlines in the united states. now take a look at big four as we refer to them. american, the new american, is the largest airline in terms of seat miles. once it's finally combined with u.s. air. ahead of united, ahead of delta, and there you see southwest. jetblue, it's number five, but way smaller than the other four, and earlier today when we talked with the incoming ceo of
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american airlines who is the current ceo-of-u.s. airways doug parker, we asked him if the consolidation play is over for airline stocks. here's what he had to say. >> it was 2005, like 11 airlines, at least 1% of the industry and now we're down, to you know, three areas. i don't think there's a lot of consolidation. nicely rational and intensely competitive airline industry which is going to be good for consumers and investors. >> investors of lcc which is the u.s. airways stock. they, today, are taking money off the table, not surprising, but we should point out, maria, when we've talked to a number of analysts about this deal and whether or not this is good in the long term for u.s. airways and the new american, almost all of them said the same thing. they believe in parker, and they believe that this airline will be a very cash flow positive airline in the years to come. maria? >> all right. thank you so much, phil and brian, and that's just two examples of some very big deals. merger activity at the highest
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levels since 2009. up close to 90% in january versus last year. >> when there was no activity last year, it's not tough. not hard to be up 90%. what does it say about the state of the economy right now? with us with their thoughts, lindsey from ftn financial along with our own steve liesman and jeff cox. lindsey, when companies are willing to put capital to work, that's a good sign for the economy, isn't it? >> certainly is. and when we see the merger and acquisition activity it generally signals better times ahead. corporations are feeling much better about their balance sheets and willing to take out new amounts of debt and put cash to work and expand the debt. when we talk about this type of activity, we're generally talking about an increase in investment with an indication that the economy is on stronger footing, but that's not necessarily the case. >> hold on, hold on. i mean, look, what's going to happen here when you get m & a? you're going to get consolidation. you're probably going to lose jobs in the short term. you're probably going to get a rationization, that's a
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euphemism for cutting the capital investment budget. >> sure. >> in the near term it doesn't end up helping the macro economy. >> in the near term job loss also can be overcome by an increase in productivity, an increase in cost efficiency which leads to further investment, which leads to further employment, income growth and further consumption down the line. >> jeff, it sounds like you need to break the tie for us here. >> i would almost take what lindsey said and stand it on its head. increased m & a activity is about confidence of what's happened behind us, not ahead of us. if you look at the history of these things, they usually happen when the market is high, not when it's low. it's counterintuitive. when you look around 2009, m & a is off a cliff and now we're near historic highs and m & a is coming back. agree with some of the points that steve made, have a crowding out effect and a lack of incentive for r & d, so i'm not real thrilled about it. it just doesn't say that much to
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me about where we're going or where we've been. >> it could be a result of what's going on. the market is obviously trading near highs. companies are using their stock as currency. interest rates at rock bottom levels. you have to believe these two items alone are reason enough to have management say we were looking at this deal and now is probably the best time to do it. >> i just think in terms of trying to read the tea leaves on this, i don't think you can read that much into m & a so from a macro standpoint about where the market is going, i don't think increased m & a activity increases very much. >> we see some deals get done but the vast majority of companies are on the sideline even though they are awash in cash. we're seeing companies invest in productivity in terms of equipment and software up 50% at the end of last year but when we look at employment and investment and structures this is still very limited, not the robust levels we'd like to see three years into the recovery. many companies citing the unfavorable regulatory and
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disinsending corporations to invest. >> here's a way m & a can help. it sends a signal down to entrepreneurs that there is a cashout at the end of the tunnel, and it could inspire ipos. ipos bring new capital, new businesses to the economy. that's a net positive for the macro. if we were to continue along those ways. the other thing it does, it does give cash out to guys like blackrock and other deployers of capital who may put it to work in another way. it's not all negative. it's not all positive. the other thing to watch, as i'm sure my colleagues on this panel will agree, is not all these things work. they look great on paper and everybody gets high about them on the press release, and the press conference, but down the road you have these $5 billion, $7 billion, $10 billion writeoffs when they see the reality what have happens. >> you know who ends up the big winners, the underwriters, the people who put the deals together and collect the fees. they are the ones. they are the stocks i would be buying. >> depends on what the purpose of the merger was. >> right. >> when you talk about the airline merger we're talking
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about, that's very defensive. guys struggling in an industry that's been struggling. >> great point. >> but when you have berkshire hathaway buying heinz, i think mr. buffet is seeing value in a company that's been around for over 100 years. >> i love the point that brian made before we came on here, it's a wonder that buffet didn't own this company already as just something that seemed so tailor made to him. it's old economy, a transparent company. >> but how do we pay for 209% premium he paid? where does that come from? i mean, yes, productivity in the very long run leads to more jobs, but in the short run, and even the medium run, lindsey, as you know it's been a big problem for job creation. >> because you've got two companies consolidating, and they are going to look for efficiencies. what does that mean, cutting jobs? >> the labor market is very tepid. we haven't seen the growth we'd like to see but i'd like to put a much longer term growth plan in place rather than worry about a band-aid fix. >> well, i think we've ended it here. we've come to a conclusion.
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thank you all. >> thanks so much. >> we're in the final stretch of trading in a market sitting on the flat line, down about two points on the dow jones industrial average. >> carnival likely to face a wave of lawsuits once that disabled ship finally makes it to port, wonder when that will happen, but just how liable is carnival in this kind of a situation? we have legal answers, and they may surprise you coming up. >> and later, do low interest rates really support an economy? jim grant says no. why he actually thinks it's put are our economy at risk. that's coming up later in the program.
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well, on the day the american/u.s. air merger becomes official. take a look, it's down about 2%, the worst day since november, but over the past year, it is up about 20%. >> yeah. u.s. airways alone is down significantly today, so why doesn't the market seem to like the merger between u.s. air and american? i'm not sure that it's a matter of not liking the merger. i just think the impact that it's going to have on the airline industry may not be as positive because you're going to see this competition from this new gorilla in town that's going to be making some cuts, probably going to maybe cut some prices to bring some competition into
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certain corridors in the airline business, and it might cut margins for some of these airlines. >> i think it's all about capacity. at the end of the day, even with these deals being done, there's too much capacity in the sky. >> yeah. >> planes have to be put down. we have to have new planes, and so because there's too much capacity in the air, the industry, even with these deals, still bloated. i mean, analyst say more capacity needs to come out of the sky. >> lower yielding roots are going to go away. >> and they have begun cutting a number of them. >> i think it's beat up, the merger under way of those airlines. two behemoths like that are going to cut capacity. >> yeah. >> here we are worse nick a bit. as we approach the close, down 11 points on the dow jones industrial average. >> as i said, the market just does not want to go positive here, so what's holding this market back? you ask our next guest. he says it may be fear, but where is that fear coming from? we'll get some answers coming up
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next. >> and then we're going whale watching. what the largest investors are buying and selling. we'll disclose that and follow up and bring you the information as we know it coming up next on the "closing bell."
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welcome back. new figures out today show europe's economy is shrinking, and it's not just greece or spain, but germany considered the strongest there is also contracting. >> many say it's the news over there that's holding up stocks over here today. joining us now is the international economist, author and cnbc contributor. we do welcome you to the new york stock exchange. >> thank you very much. >> thanks for being here. >> a pleasure to be here. >> what's your sense? is europe reviving or not, and what impact is it having over here in the u.s., do you think? >> i think firstly the market is slightly overreacting, backward looking information. we know what the ongoing structural problems have been in europe. >> right. >> significant policy changes and announcements over the past six months, eight months, have actually been quite supportive of europe, and i think nothing that directs iind in a hard landing, the breakup and scenario that will work till the middle of last year. optimistic about where things r.on a relative basis, the u.s.
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employee is much more constructive than the european story. >> i guess people were surprised that even germany, which is considered even the strongest economy in europe is also showing contraction, so is germany -- have you noticed that we're seeing a leg down in activity? i mean, obviously they are all trading with one another so germany will get impacted? >> absolutely. looking at some of the imt forecasts for january. actually i think the story is improving. i think if you look at german performance in december and december, i think the story is actually more of an akscceleraig story, and, again, i really believe the policy-makers are much more constructive and much more supportive, so if things get pretty bad, which they potentially could do, i think they will be there to back up the situation. one other thing, monetary policy in the eurozone compared to uk, u.s. and even japan, is still very, very aggressive. >> i was going to ask you about that. it would appear mario draghi is
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being dragged kicking and screaming into the currency war with japan, with the united states. >> yes. >> what do you make of that, and what impact does that have on the recovery? >> well, i think basically i'm still quite disappointed that the u.s. policy-makers haven't been as aggressive as they might be. a lot of announcements in the policy space, cutting rates, a lot of wiggle room in that area. >> on the one hand wasn't willing to cut rates a couple weeks ago but was talking down the euro pretty clearly. >> not only that. today there's been a lot of discussions about the possibility of going to negative rates and the ecb following what has happened with denmark, so i think there is a lot of scope there to see much more policy. >> what's your take on sort of the positives? we've talked about energy and the potential for energy, exploration in this country. it seems like shale is increasingly being seen as one of the most important developments in the united states? >> absolutely. the story, just think about this. again, about a year ago,
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certainly in the aftermath of the 2008-2009 crisis we've seen u.s. gdp 1.5 and 2%. this is not the story we're seeing in europe. the u.s. story, the interesting story around the housing rebound. no seller is not constructive or positive about it, but there's something going on here that feels like there's momentum and obviously looking at the m & a story, three big-time transactions in the market. i think it's turning around. >> so do you feel that europe is on the right track though? >> i think there's a lot of scope for policy intervention, and i'm pretty optimistic that they are at a point where they will be more active. >> do you see bumps along the road? >> absolutely. i think the big ones are repayments, repayments scheduled, the election in germany and we all know, i believe that angela merkel will be re-elected, but those are the sort of big things that i'm looking at to see how the markets will react. >> let me switch gears to ask you your take on the banking
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sector. i know you're on the board of barclays so i'm not asking to give away any secrets here, but there's a real movement across the world to split up some of these banks. how do you think this is going to go? are you expecting a global standard when it comes to the financial services sector? what's your take on how the major banks change the course of business in the coming years? >> well, maria, i'm sure you're aware that, obviously, i have restrictions about what i can say, but i think that the story in general since 2009 has been one of global standards. i know christ ianella guard has spoken about this going back to the g-20. a lot of discussion about coming together. there's a lot of conversations going on in the background that are aiming to have some convergence around these issues. remember, these economies themselves are undergoing very difficult challenges. the european economy is very difficult with where the uk is now, struggling with the potential triple dip and the u.s. is in a very different
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place. implications of what regulatory reforms can do in the banking space is something that's still open up for debate. >> good to talk with you. >> thank you for having me. >> we're going to take a break and come back with a closing countdown and head towards ringing of the bell. >> americans have loved opening up their 401(k) statements recently because the account balance is up 12%. coming up. why that could spark more workers to increase more contributions and give this market even a further boost. >> and the cruise may finally be close to ending, but the pr and the business nightmare is nowhere near over for carnival. the lawsuits and fallout that are yet to come coming up later on the "closing bell." but at xerox we've embraced a new role. working behind the scenes to provide companies with services... like helping hr departments manage benefits and pensions for over 11 million employees. reducing document costs by up to 30%... and processing $421 billion dollars in accounts payables each year. helping thousands of companies simplify how work gets done. how's that for an encore?
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